US Won't Default on Aug. 2

New reports indicate the feds have a little wiggle room
By Evann Gastaldo,  Newser Staff
Posted Jul 26, 2011 6:26 AM CDT
Updated Jul 26, 2011 7:55 AM CDT
In this photo illustration US Treasury checks are piled at the US Treasury printing facility July 18, 2011 in Philadelphia, Pennsylvania.   (Getty Images)

(Newser) – The US blew past a seventh (and final?) deadline for coming up with a debt ceiling extension plan yesterday, but new reports indicate the country may not actually default a week from today. According to economic analysts at UBS, Aug. 8 is the earliest date the government might run out of money; Barclays says Aug. 10. Wells Fargo is even more generous, indicating that as long as spending is cut back some, most of the bills could be paid through the end of the month, the Washington Post reports.

Daily tax receipts have been higher than predicted, and as of Friday, the Treasury had $85 billion in cash on hand. Even so, the Treasury Department is standing by the Aug. 2 Armageddon scenario, and it's not clear how the market will react if the government doesn't raise the debt ceiling. August 4, when $100 billion in debt will be "rolled over" (paid back, with new debt issued in the same amount), is of particular concern; officials are worried about what will happen if investors don't come forward to buy the new debt.

My Take on This Story
Show results without voting  |